Netflix is set to spend approximately $18 billion on content in 2025, but Chief Financial Officer Spencer Neumann signaled that there is plenty of room to revise that number up in the years ahead.
“We look at it every quarter, every year and iterate,” the Netflix executive told an investor conference hosted by Morgan Stanley on Wednesday. “We are not anywhere near a ceiling.”
When asked about how the streamer comes up with its spending forecasts, Neumann said its “a little art in science” that starts with the predictability of its revenue, which they have a “pretty good sense of.” It then sets margin targets based on entertainment value, engagement, revenue and profit forecasts.
“We also balance having enough for the long term investment to continue to drive growth,” he continued. “And that’s why we want to grow margins each year, sometimes a little more, sometimes a little less, depending on the in-year investment opportunities. And of course, then what’s leftover is to spend into content. And so then there is the bottoms-up exercise, which we talked about, as we look at those categories of content, across genres, across countries and regions and across original and licensed content and where can we deliver highest impact.”
Netflix currently boasts 301.6 million subscribers globally, which Neumann said translates into an audience of over 700 million around the world who are watching its content.
The service is in around 40% of connected TV households around the world and has captured 6% of its addressable market, with the portion of total TV viewing in the U.S. and other countries it operates in at less than 10%.
“I do think we are still just getting started,” Neumann added. “We see opportunity to grow everywhere. It’s more about where is the highest opportunity to grow and spend. We want to stay in growth mode versus maintenance mode for as long as possible.”
As it looks to the first quarter of 2025, Netflix is forecasting 11.2% year-over-year revenue growth to $10.42 billion, which is modestly below its full-year guidance due to the timing of price changes and seasonality in its ads business. It also expects net income of $2.44 billion, earnings per share of $5.58, operating income of $2.94 billion and an operating margin of 28.2%.
For the full year of 2025, Netflix expects revenue growth of 12% to 14% to somewhere between $43.5 billion to $44.5 billion, up $500 million from the prior forecast. As a result, it’s targeting a 29% operating margin for 2025, up from previous guidance of 28%.
